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CHANGING THE RECIPE ON HOTEL DINING restaurants’ appeal to the local public,” Sangree said. “They’re giving the developers more flexibility in developing a concept that will be popular with local diners.” The trend is notably visible in and around downtown Cleveland, thanks to a slew of new highend hotels that have either recently opened or are under development. Restaurants like Urban Farmer Cleveland at the Westin and three drinking and dining establishments at The 9, opened on Sept. 6, are as equally set on capturing the local dining community as they are hotel guests. “Because we are a chef-focused, food-focused, community-facing restaurant, we are heavily focused on the local market,” said Troy Christian, general manager of Urban Farmer. “I’d say probably 95% of our lunch customers are local, and about 75% of our dinner diners are local.” Recently, Hilton Cleveland Downtown developers announced See DINING, page 22
A CLOSER LOOK AT DOWNTOWN HOTEL DINING OPTIONS | For a look at new and recent projects, see page 22
DHANRAJ EMANUEL
URBAN FARMER AT THE UPPER UPSCALE WESTIN: A cognate of the Portland-based farm-to-table restaurant, Urban Farmer qualifies itself as Cleveland’s modern steakhouse, with a range of beef options on the menu. This Sage Restaurant Group establishment seemingly has convinced some skeptics wary of hyperbole and a non-indigenous concept that it should be a destination for local carnivores and cocktail aficionados, based on dining reviews and social media conversation. Its partnerships with farmers and purveyors, most of which are located within a 100-mile radius of Cleveland, appeal to eaters who prioritize local sourcing and quality ingredients.
But OfficeMax founder says he’s not giving up on Max-Wellness brand By STAN BULLARD sbullard@crain.com
By KATHY AMES CARR clbfreelancer@crain.com
Twenty to 30 years ago, a number of hotel brands partnered with outside restaurant operators with the hopes of appealing to both guests and the community while generating a guaranteed lease payment. But quality control was inconsistent depending on the lessee/operator, so hotels eventually brought their food and beverage operations inhouse, replacing their independent concepts with standard bistros that served predictable American fare, said David Sangree, president of Lakewood-based Hotel & Leisure Advisors, a hospitality industry consulting firm. But in recent years, hotels — particularly luxury, upper upscale and upscale brands — have realized that a sustainable option for attracting locals and out-of-town guests to their properties come in the form of one-off chefdriven concepts with painstakingly crafted menus. “The brands are becoming more interested in their
Last two of Feuer’s wellness stores close
CONTRIBUTED PHOTOS
LAGO, KEN STEWART’S (pictured), WILLEYVILLE, NEAR THE ALOFT HOTEL: This upscale hotel directs its hotel guests to any of the property’s three restaurants, all at the helm of native chef/owners. Lago, an upscale Italian restaurant, provides the hotel’s room service, with a service elevator from its kitchen to each of the hotel’s guest floors. Lago also is the exclusive caterer for the hotel ballroom and outside veranda venue located between the hotel and Ernst & Young building. Ken Stewart’s seafood and steak house exclusively caters the penthouse veranda on the 21st floor of the EY building. Willeyville, the third property eatery, offers modern American cuisine influenced by the seasonality of local ingredients.
Calling a retreat, OfficeMax founder Michael Feuer has closed the last large-format, brick-andmortar stores of Max-Wellness, but he’s not conceding defeat for the health and wellness retail venture. The last two Max-Wellness stores — one on Chagrin Boulevard in Woodmere Village and the other at the Promenade portion of Crocker Park in Westlake — are empty after Warrensville Heights-based Max-Wellness recently closed them. The shutdown has sparked lawsuits in Cuyahoga County Common Pleas Court by the landlords of the properties. The local stores were the last of four operated by Max-Wellness, which Feuer had launched in 2009 with plans to have 30 in operation within two years. Two Florida stores closed recently. Feuer is a retailing legend because of his role in creating what became the big-box office supplies concept. He started OfficeMax in his basement with a $20,000 investment that he, his partners and investors built to 938 stores before selling it in 2003 to Boise Cascade Corp. for $1.5 billion. OfficeMax’s headquarters was later moved to Chicago; it merged last November with Office Depot Inc. as the office superstore segment consolidates. Although Feuer had a convenient way to deflect blame for the closings away from retailing matters, he focused on street retail issues as the cause of the closing. He did not refer to a lawsuit Max-Wellness filed July 31 against Thomas Mack, its former chief financial officer, in county court alleging that he left unpaid an undisclosed amount of vendor bills, rents and taxes. According to the complaint, MaxWellness management discovered
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Akron’s mighty Ducks Under Babby’s ownership, minor league baseball club is regaining fans it had lost By KEVIN KLEPS kkleps@crain.com
An uncertain ownership situation in Akron forced Jim Pfander to leave his post as the Aeros’ executive vice president and chief revenue officer following the 2011 minor league baseball season. Prior to the 2013 season, Pfander returned to his native Akron, now as the general manager and chief operating officer of the Cleveland Indians’ Class AA affiliate. The reason for his change of heart was pretty simple. “Ken Babby made me come back,� Pfander said. It’s a common theme in Akron,
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which has a rebranded minor league team — now the RubberDucks — that plays in a much more stylish 17-year-old home, Canal Park, in the heart of downtown. Since Babby, the son of former powerful sports agent and current Phoenix Suns president Lon Babby, left the Washington Post to purchase the Aeros in October 2012, Akron has won back a lot of the fans it had lost in the latter years of the Agganis family ownership. In 2014, the second year of Babby’s ownership and the first with the RubberDucks name and stylish logo, Akron averaged a crowd of 5,157 fans during a regular season in which the franchise earned its ninth playoff trip since 2002. The attendance norm marked a 36.7% increase from 2012, when the Aeros managed only 3,772 fans per game during the final season of Mike and Greg Agganis’ ownership. The Aeros’ per-game attendance has jumped 11.9% and 22.2% the last two years, and much of the credit is given to the 34-year-old Babby, who has privately financed $5.6 million in ballpark improvements. “He’s phenomenal,� said Akron mayor Don Plusquellic, who had his share of battles with the previous father-son ownership team. “He’s outspoken about the city and this community, and how much he appreciates our help.�
Getting their ducks in a row Babby swung for the fences with his first Canal Park upgrade — a $1.65 million scoreboard that debuted in 2013 and is the largest in all of Double-A baseball. During the summer of 2012, Babby, who left his job as the Post’s chief revenue officer and VP of digital that August, attended Aeros games as a fan and took notes. He
said he entered serious negotiations with the Agganis family after his first visit to the ballpark, and in subsequent trips from the nation’s capital he “took as many pointers from fans� as he could. Babby said an Akron business leader told him the suites “looked like an old bus terminal,� and he agreed with Plusquellic’s assessment that the previous owners had “let the park go.� The mayor said Mike Agganis, a Boston real estate player who purchased the team for $48,000 in 1981, “knew it was a valuable franchise, and he would make money when it sold.� Agganis couldn’t be reached for comment. Babby said Canal Park’s “bolts were intact and strong,� but the once-sparkling facility “had lost its way in terms of upkeep.� In the months prior to the 2013 season, the new ownership team renovated the suites and concourses, enhanced the food and beverage options, and added the gargantuan videoboard. A year later, the newly minted RubberDucks “really gutted the ballpark,� adding a 4,000-squarefoot restaurant that is open yearround, a private party and event area (“The Duck Club,� of course), a picnic area (“Fowl Territory�) in left field that features eight-top picnic tables and 56 premium seats (“Duck Row�) with swivel capabilities and a drink rail, and a “Tiki Terrace� in right field, complete with a firstcome, first-served tiki bar. Pfander, who spent the 2012 season as the general manager of the Class A Port Charlotte Stone Crabs before Babby convinced him to return to Akron, said the franchise “identified key areas� that needed improvements, and one was “the lack of group areas.� “We didn’t have a place for See DUCKS, page 8
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International traffic speeds up at the port
A Root employee hand melts a signature tree design into the top of a candle.
By JAY MILLER jmiller@crain.com
ROOT BRANCHES OUT Medina candle company looking to grow globally By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com
The A. I. Root Co. has been making candles in Medina for nearly 85 years. The product has changed over time — scents were first added in the 1960s — as have some of the processes. Root Candles’ plant boasts a wide range of capabilities, from automated candle-making machines to traditional Easter church candles decorated by hand. And now the local company is making its first concerted push into foreign markets. President Brad I. Root said the company took its first full step into the overseas market earlier this year, putting a warehouse in the United Kingdom and attending four trade shows in Europe. The company even had its first export-focused intern this summer through a program with the state of Ohio’s Development Services Agency. The company’s use of all-natural ingredients helps it stand out in the market, Root said. Root Candles also is looking to grow its foothold in Far East markets, including Korea, where there’s a strong focus on all-natural products. Root said South America is intriguing because of its strong religious roots, and the company also has looked into the large market of Africa, particularly Nigeria, as well as the U.S.’ nearby neighbor of Canada. Candles were very popular with U.S. consumers in the 1990s, so foreign competitors came in to take advantage of the growing market, he said. After the challenges posed by the recession, Root said the company began thinking that exports offered the best chance for growth. “The U.S. market is well saturated in candle lines here,” Root said. And the markets in the United States have changed over time. Root said there are generational differences that affect the company’s sale of its dinner and church candles, as the use of those candles are traditions that need to be passed down. But CEO Rex Mason said the church candles are still very important to Root Candles, and that business is still twice the size of the company’s consumer business. The company does not disclose sales figures. Root Candles makes the equivalent of about 20 million candles a year using 8 or 9 million pounds of wax, said vice president of operations Floyd Ostrowski. In addition to the company’s own brands, Root Candles also makes some private label products, Ostrowski said. Root Candles employs about 180 people, including its sales team and employees at a small plant in San Antonio. The company’s candles are sold online, in high-end supermarkets and specialty stores, and in the company’s 20,000-square-foot store attached to the Root Candles factory. Ostrowski said having its own gift shop helps the See ROOT, page 9
PHOTOS BY REBECCA R. MARKOVITZ
Above, an employee glues a wooden wick into an empty glass. Below, candles are filled with wax. At bottom, candles are tested in a burn room, where they measure such things as soot output and burn quality.
The volume of international cargo in and out of the Port of Cleveland through July is up nearly 28% over last year, in part because of several strategic moves by the ClevelandCuyahoga County Port Authority. Shipments of iron ore and other bulk materials, though, are down slightly due primarily to icy conditions on the upper Great Lakes earlier in the year. Key to the increase in international traffic is what’s being called the Cleveland-Europe Express, a once-a-month cargo service between Cleveland and Antwerp, Belgium. The Port Authority is chartering the Fortunagracht, a ship owned by the Amsterdam-based Spliethoff Group, for $850,000 a month, a cost which it hopes will eventually be fully offset by shippers. “It’s going very well over the first two sailings,” said David Gutheil, vice president of maritime and logistics at the port authority, about the subsidized international service. “We’re handling new cargoes, but like every startup, every month is a fight to find new business and new cargoes.” The port authority is not yet releasing financial details of the charter arrangement. Through July, international cargo is up to 204,448 metric tons from 160,014 metric tons in the like period of 2013, a 27.7% increase. The number of international vessels calling on Cleveland is up even more, to 38 ships from 23, a 65% increase. Some of that new cargo is massive, European-made electrical equipment on its way to power companies rebuilding their systems. That traffic is coming to the Cleveland port in part because of another move by the port authority. In 2012, it built a $3.9 million on-dock rail loop that makes it easier, and cheaper, to connect the docks to the major CSX and Norfolk Southern railroad lines. “It seems we’ve developed a niche for oversized loads, like 440,000 pound transformers, and boilers and generators,” said William Brown, co-owner of Cleveland Commercial Railroad, a short-line railroad that operates the Cleveland Harbor Belt Railroad on the docks. “In some cases, we’re in the right position to move the stuff.” The cargo service and the new rail line are part of a Port Authority strategy to capitalize on the Port of Cleveland’s position as the first major port that international shippers can use on the Great Lakes. Until now, shippers had to dock at an East Coast port such as Baltimore, or travel several days longer to get to the port at Burns Harbor, Ind. “The boats into Baltimore can get there from Europe in nine days; here, it’s 12 days,” Brown said. “But they can sit there for as much as a week (waiting to be unloaded), and it’s longer rail routes from there.” He said he’s got about two dozen oversized loads booked for the months ahead. The uptick in business has meant additional work for dock workers. John Baker, of the International Longshoremen’s Association, said man-hours on the Port of Cleveland docks are up 5% over last year, suggesting much of the volume increase was in easy-to-unload cargo. Volume of the traditional bulk cargoes that come into the harbor and up the Cuyahoga River are down slightly, due largely to bad weather earlier this year, said Glen Nekvasil, vice president of the Lake Carriers’ Association, a group that represents American-owned ships on the Great Lakes that carry iron ore, coal, limestone and stone. “The problem with our year-to-date totals is they are down because of the horrible delays in March and April,” Nekvasil said. “Through July, we moved 39 million tons of iron ore, which is a decrease of 10% compared to a year ago, but that’s not a fully accurate reflection of the market because of icy conditions in March and April.” “In April alone, we were down 50%,” he said. “Voyages that were supposed to take three days were taking 11 days.” Iron ore shipments to the Cleveland port totaled 1.5 million net tons. Nekvasil said shipments of coal are off, as well, largely because of a decision by Canada to curtail coal-fired generation of electricity. “It’s been a decent year, but the horrible delays of March and April put us behind, so we’ve brought out a few additional vessels to play catch up,” he said.
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RevoLaze is going up against half of the stores in your local mall. The 1-year-old Westlake company is trying to stop a long list of popular retailers from importing jeans treated with lasers. In federal lawsuits and a complaint filed with the U.S. International Trade Commission, RevoLaze argues that those 17 retailers are violating patents designed to protect the company’s laser-etching technology. Lasers can be used to print patterns on jeans or give them a worn look. The trade commission case has created some noise in the fashion industry. Not only does it target a long list of big-name brands like The Gap, Levi Strauss and American Eagle, but the industry isn’t used to dealing with international patent infringement cases, according to a story about the case published in the Aug. 22 edition of Women’s Wear Daily. Such cases might become more common as the clothing industry becomes more technologically advanced, according to attorneys cited in the story. RevoLaze is asking the trade commission to open an investigation. But why would a company with eight employees get into a legal fight with so many big, well-funded companies? CEO Darryl Costin Sr. wouldn’t
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say much because the cases are still open. However, RevoLaze does rely heavily on patents. Twenty years ago, Costin started developing what he says is a faster way to etch patterns into denim and other materials. More than a decade ago, he formed a company to sell jeans treated by an early version of the technology. But the Fractal Jeans Co. didn’t last long, even though the Westlake-based company won an endorsement from popular Cleveland Indians shortstop Omar Vizquel. This time, however, Costin is taking a different tactic. RevoLaze, formed in 2013, aims to license its patents to other companies. So far, RevoLaze has licensed its system to a few businesses outside of the apparel industry. Among them is Lear Corp., which is interested in using it to etch patterns into car seats. RevoLaze received a $5 million investment from the Michigan-based automotive supplier last year, according to federal documents and information from the company. But the denim market is RevoLaze’s primary target. With the help of a second investment — $2.6 million from Roy P. Disney, the grandson of Walt Disney’s brother — the company plans to install a manufacturing-scale laser etching machine at its headquarters next month. The company aims to use
the machine to show jean manufacturers what its technology can do. The 5,000-watt machine can print patterns onto denim “much faster” than other laser systems, according to Costin. In the trade commission complaint, RevoLaze says it believes that several of the retailers import jeans treated with other systems. For instance, in the complaint it references news stories and other evidence suggesting that some of the retailers use systems developed and marketed by two Spanish companies, Easy Laser and Jeanologia. Costin implied that some of them could’ve gotten the idea from him. “Basically there are companies out there who looked at our technology in the past, and are now selling jeans manufactured with the laser abrasion processes,” he stated in a news release announcing the trade commission case. RevoLaze is asking the U.S. International Trade Commission to issue a general exclusion order, which would prevent any company — not just those named — from importing and selling denim treated by laser etching technology. And there could be others out there: RevoLaze says in the complaint that “it is difficult … to identify all manufacturing facilities that apparel companies use to manufacture infringing garments,” especially because the products are made in so many different countries.
The next “Who to Watch” section of the year, “Who to Watch in Education,” is scheduled for publication on Nov. 3. It will highlight up-and-comers and innovators in the education sector. If you think you know who will be among those leading the Northeast Ohio education sector of the future, drop an email to sections editor Amy Ann Stoessel, astoessel@crain.com, or call 216-771-5155. Send your suggestions no later than noon on Monday, Sept. 22. Please include the person’s name, position and a paragraph explaining why he or she stands out.
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There are no hard and fast requirements for this section, other than that the candidate needs to exhibit the kind of potential that makes him or her someone to watch in the field of education.
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This is the last “Who to Watch” section for 2014, but stay tuned for announcements of future sections planned for 2015.
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Ice Bucket Challenge more of a lesson than threat By TIMOTHY MAGAW tmagaw@crain.com
Local nonprofits aren’t worried the ALS Ice Bucket Challenge will throw cold water on their own fundraising efforts, but they agree there are a few things they could learn from the viral campaign’s success. Over the last month or so, the ALS Association, the national nonprofit aimed at fighting amyotrophic lateral sclerosis, or Lou Gehrig’s disease, said it raised more than $100 million through the challenge that flooded the nation’s Facebook feeds. During the like period last year, the group said it raised $2.8 million. That’s a massive increase, and local fundraisers say they need to do everything in their power to harness the power of social media. “It really made us, as a development team, sit back and do some soul searching and brainstorming how we can better leverage social media for fund development,” said Terri Wimms, the chief administrative officer at the Cleveland-based Visiting Nurse Association of Ohio, whose own CEO, Claire Zangerle, doused herself in ice water for the ALS cause. It would be unwise, many organizations say, to simply recreate the challenge or repurpose it for their own cause, but many are exploring ways to engage their donors on social media platforms such as Twitter, Facebook and YouTube. No
longer can they rely solely on phone drives or direct-mail campaigns. And with so many of Cleveland’s major nonprofit institutions entrenched in major capital campaigns, local philanthropic organizations are doing anything they can to stand out. “You have to sit down and ask yourself, aside from doing the yearly live events or email blasts or letters, ‘How can we get creative with this?’” said Jennifer Marini Garvin, a social media specialist at Fathom, a digital marketing and analytics agency in Valley View. Take Hattie Larlham, a Twinsburg nonprofit that focuses on helping people with developmental disabilities. The organization recently promoted on social media its first Over the Edge fundraising event, which gave people — if they each raised $1,500 — the opportunity in August to rappel 22 stories off the PNC Center in downtown Akron. The effort raised more than $140,000. Also, on a much larger scale, the Cleveland Clinic launched VeloSano, a cycling event that raises money for cancer research. So far, the Clinic’s effort has netted about $1.8 million toward the cause. Sure, participants in the Hattie Larlham and Cleveland Clinic challenges aren’t necessarily dumping buckets of water on their heads, but the idea to get people involved in doing more than just writing a check. Rappelling off a building or setting forth on a bike ride that could range between 25 or 230
CONTRIBUTED PHOTO
Cleveland Clinic CEO Dr. Toby Cosgrove took the ALS challenge in August. miles aren’t activities likely to get everyone involved, but they grab headlines and people’s attention on social sites. However, sometimes simplicity is key, as shown by the ice bucket challenge. “It was really simple and promoted sharing because people were tagging their friends,” said Melissa Mathews, Fathom’s brand and communications manager. “People saw it as their own personal thing and were able to make it their own and do it in a unique way.” Michelle Amato, one of the vice chairs of the Clinic’s Philanthropy Institute, said there’s been a greater emphasis among nonprofits, partic-
ularly large ones like the Clinic, to engage people at a younger age with lower-level gifts rather than only asking for big checks from older donors. She said the Clinic didn’t have many tools to do that, which is one of the reasons why it launched VeloSano. The Clinic also recently launched a partnership with Covelli Enterprises, the largest franchisee of Panera Bread restaurants, to drum up smaller donations with, as one example, the sale of cookies for autism awareness month. “It’s about having opportunities for someone to give $1 on up,” Amato said. Some analysts and ice bucket
naysayers have suggested the widespread success of the challenge could hinder other nonprofits’ fundraising efforts. The idea is that if someone donates $100 to the ALS Association, another deserving charity could miss out on much-needed funds. However, local fundraisers aren’t keen on that hypothesis, and say that, if anything, the ice bucket craze could bring more budding philanthropists out of the woodwork. “If you do it once, the idea of giving becomes easier,” said David Schrader, University Hospitals’ vice president of institutional relations and development. “So, in many ways, the ice bucket challenge helps. These things are important to do. It creates a pool of philanthropists that wasn’t out there before.” Schrader, for instance, said he wouldn’t be surprised if more donors — inspired by the ALS challenge — come to UH looking to fund efforts at the health system to fight the fatal neurodegenerative disease. Also, representatives at the Ronald McDonald House say they’ve even received a few donations as a result of ice bucket mania because people are supporting their favorite local charities in addition to the ALS Association. “We are excited about the way this campaign has energized folks — people feel like they can make a difference in this capacity, even if it’s in $10 increments,” said Laura Klingler Doyle, the Ronald McDonald House of Cleveland’s communications manager.
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COSE opens advice line DUCKS By TIMOTHY MAGAW tmagaw@crain.com
The health care system seems to be getting more complicated, and the Council of Smaller Enterprises believes it has found a way to help small business owners and their employees make sense of it all and ask the right questions of those who provide their medical care. The small business advocacy organization recently teamed up with Premier Health Advocates, a Beachwood-based company, and quietly launched COSE Health Advocates — a concierge-like service that gives participants access to a network of physicians who will answer medical questions, interpret diagnoses and serve as their personal guide when faced with health care issues. The docs aren’t aligned with a particular health system or insurer, and COSE and Premier stress these professionals give unbiased advice. COSE says until now there wasn’t a product like this on the market for small businesses. Some larger companies offer a similar benefit to their employees, though it’s typically tied to their insurance provider. “This is about helping you figure it out,” said Steve Millard, president and executive director of COSE, which has been working over the last year or so to reinvent itself and offer new services to its members. “They’ll help you find the right kind of doc. This is about getting it right and having a consultant to help you get through the process.” The program launched about a month ago, and so far it has about 200 enrollees. The program costs $3.50 per month, per business owner or employee. The program covers the
business owner or employee, their spouses or domestic partners and household dependents under the age of 26. Participants also have the option of including their parents or parents-in-law. “We came up with this idea when we asked the question if everyone had a doctor in their family, what kind of health care would they get?” Premier co-founder Dr. Arman Askari said. “These doctors can be your guide and educator for any health care situation.” Askari launched Premier about four years ago as a way to continue his work in the medical field when his own disease — young-onset Parkinson’s — made it difficult for him to practice medicine. Askari, who worked at both University Hospitals and Cleveland Clinic before launching the company, said the idea is to serve as any patient’s consigliere — think “The Godfather” — when it comes to health care and interpret what he described as “doctor talk.” “If everyone had an advocate, the health care system would be much more streamlined and much less wasteful,” Askari said. Millard, who used the service to sort out his mother’s medical issues, said these sorts of services are important as the health care system becomes more consumer-driven. With an increase in high-deductible health plans, for example, patients have to take more control of their health care decisions. “In the past, people basically went to the docs in their network and did what they were told,” Millard said. “There wasn’t a whole lot of control. There’s no instruction guide that’s come with this change.”
prior to the 1997 season. Between 2004 and 2010, the Aeros’ attendance dropped 46.4%. A year later, Agganis was prepared to sell the team but had a change of heart, Crain’s reported at the time, and five new staffers lost their jobs at the conclusion of the season.
continued from page 4
picnics, a place for people to gather,” Pfander said. “Now we host customer appreciation picnics (in the redesigned left-field area), which is such a big part of minor league baseball and how the business has changed the last few years.” Pfander said the RubberDucks don’t rely on season tickets as much as they did in the past, partly because there is a “higher show rate on picnic tickets.” The latter produces bigger revenues because of the higher price of the premium tickets and the money generated from food and beverage purchases. One of the notes Babby took during his 2012 ballpark tours was the fans’ love of fireworks. He said he “doubled down” on the promotions, holding fireworks after every home game on Friday and Saturday, instead of the previous Fridayonly tradition. “That doesn’t seem like a big thing, but it’s something the fans appreciate,” Babby said. The RubberDucks had 12 regularseason sellouts in 2014, including the final six fireworks dates.
Homework pays off “Minor league baseball teams and sports teams in general don’t just hang for-sale signs,” Babby said. So when the budding entrepreneur heard from a “wonderful source” that the Aeros could be had for the right price, he did his homework. His father — who represented such former and current NBA stars as Ray Allen, Tim Duncan and Grant Hill — “was particularly helpful” in negotiating a lease with the city (Babby committed to a 25-year
BUSINESS
‘Epicenter’ of downtown Akron
Ken Babby stay with a five-year club option tacked on after buying the team). As general counsel of the Baltimore Orioles, Lon Babby played a lead role in the talks that led to the development of Oriole Park at Camden Yards, which debuted in 1992. The ownership change in Akron was very welcome in the mayor’s office. “He gets it as well as anyone I’ve ever seen,” Plusquellic said of Babby. “When you develop a network of people, it helps everyone. It helps the whole economy. The more people who buy tickets, the more buy peanuts.” Plusquellic noted how the Aeros were once a major draw — in 1998 and ’99, the franchise drew more than 500,000 fans and averaged more than 7,500 fans per contest. “For four or five years, we were one of the best,” the mayor said, “but the other owner let it go.” Agganis owned the franchise for 31 years and had moved it from Lynn, Mass., to Burlington, Vt., and to Canton before finally settling on Akron when Canal Park was built
Pfander, whose first tenure with the Double-A franchise lasted only one season, said he clicked immediately with his future boss during a 2012 breakfast meeting. “By the time I got back to my house in Rotunda, Fla., I got a call from Ken offering me a GM position,” Pfander said. The 14-year minor league veteran accepted five days later. Two seasons later, Pfander feels as if he “got the chance to come back home and see this thing through.” Plusquellic said at the time it was built, Canal Park “was the most significant investment we made to get people downtown. It gave people a good reason to bring their kids downtown.” The mayor believes the RubberDucks are helping the city do a much better job of achieving that goal under Babby’s stewardship. The relatively new owner says he’s “working to make Canal Park the epicenter to affordable family fun six months a year.” Babby cited a Saturday night in June in which 3,800 people watched the Disney movie “Frozen” at Canal Park. They paid $5 at the door, with the money going to charity. “He’s a genuinely good guy with all the right intentions,” said Indians president Mark Shapiro, whose club has developed a “great” partnership with Babby’s team — one that is in place through at least the 2016 season. “We’re not just a baseball team that hosts 71 games,” Babby said.
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ROOT continued from page 5
company better understand its customers and shows them how to market the products. The company’s most popular product now is its Seeking Balance line, which Mason said was introduced in late2010. Root said the wax-filled candle, which comes in scents like “Relax” in geranium lavender and “Awaken” in basil and lime, is designed to affect mood and features a wooden wick. It’s popular among the younger market, as well as those interested in healthy products. “It seems to be a strong growth area for us,” Root said. The company adds new fragrances about twice a year, Mason said. It has more than 70 different fragrances total in categories like
home and hearth, fruits or flowers. New this holiday season will be scents like “Champagne Toast,” “Mulled Wine” and “Spiced Sangria.” “You have to have different products to appeal to all the different scents people enjoy,” Mason said. Root Candles is good for Medina for a number of reasons, and Mayor Dennis Hanwell said the city is grateful to have the company there. Root Candles brings tourists from outside the city and state to Medina, he said. And the company is philanthropic-minded and supportive of events downtown. “They not only employ a good number of people here,” Hanwell said. “They’ve been a long-standing community member.”
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PUBLISHER:
John Campanelli (jcampanelli@crain.com) EDITOR:
Elizabeth McIntyre (emcintyre@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Tax talk Burger King’s planned acquisition of Tim Horton’s is the latest example of a company making a deal to avoid the U.S. tax code. And it’s the latest symptom of a problem — a flawed tax system — that must be fixed once and for all. By acquiring the Ontario-based coffee-and-donut shop, Burger King would be able to declare it’s a Canadian company — and can enjoy a more friendly tax rate than it does in the United States. This socalled “tax inversion” happens when a company reincorporates in another country to take advantage of a lower tax rate. It’s a growing corporate trend. In the past decade, 47 U.S. companies have reincorporated overseas, according to data from the Congressional Research Service. That number includes Beachwood-based Eaton Corp., which moved its global headquarters to Dublin, Ireland, after purchasing Cooper Industries in 2012. Yes, Eaton, which has called the Cleveland area its home for almost a century, is now considered an Irish company. So, why are more companies choosing to go this route? It’s pretty simple. The United States has the highest corporate tax rate among developed nations — at 35% — and that’s before state and local taxes are added in. It’s worth noting that, because of loopholes, most companies do not pay the 35% rate. Most pay about 28%, which is still one of the highest rates in the world. Some large corporations, which can pay for powerful lobbying efforts, have created even larger loopholes that allow them to pay much less. Considering all that, it’s clear that the time has come to streamline tax rates, tighten loopholes and remove the incentive for companies to reincorporate overseas. The U.S. would do well to make such relocation more difficult, too. Thoughtful, comprehensive tax reform — which would involve cooperation between Congress and the White House to get legislation passed — would allow U.S. companies to compete in the global marketplace while still being U.S. companies. If that doesn’t happen — and the track record suggests it won’t — the Obama administration may go back to the “executive order” well by issuing rules that would make it harder for companies to do inversion deals. That, unfortunately, won’t have nearly the impact a broader policy change would. But this isn’t just a government issue. Beyond Washington, corporations themselves ought to work toward change that discourages what the White House calls “corporate deserters.” After all, roads, bridges and other infrastructure don’t pay for themselves. Those corporations that moved to dodge taxes benefit from the slack the rest of us — from corporations that stay home to the French-fry cooks at Burger King — are forced to pick up.
FROM THE PUBLISHER
Always pick up the trash told me how he selected leaders for his So what are the traits of a great manchurch,” he recalled to about 600 attenager? dees at an Akron Roundtable lunch last Confidence? The ability to inspire? month. “He said he watched Honesty? A positive attitude? and noticed which of his Creativity? members stopped to pick up Maybe more than all those litter in the church’s parking it’s a willingness … to pick up lot, sidewalks and hallways. trash. He said it was his most reliNew University of Akron able indicator of effective president Scott Scarborough leadership.” hands out a bulleted list of Scarborough went on to say “leadership and management that over the decades, he has principles” to his managegrown to understand the truth ment team. It’s a single sheet and wisdom of that little test. of paper, front and back. He’s JOHN done it for 25 years. “The person who is too imThe list is actually two lists: CAMPANELLI portant to pick up trash is One defines success, and the probably too important to other outlines mistakes. The success list help a student who is struggling to unincludes items on ethical behavior, derstand an important concept,” he said. teamwork, communication, positive at“A person who is too important to pick titude and exceeding stakeholders’ exup trash is probably too important to pectations. Good stuff. help a colleague who is struggling to The mistakes include losing your cool, overcome an important research chalfailing to work hard, being territorial, lenge. A person who is too important to taking issues personally. It’s a “not-todo the little things is probably too impordo” list. tant to do the big things well.” Also on that second list: “Failing to Scarborough talked about a bunch of pick up trash.” other stuff during that lunch, from colSeems kind of strange, until you hear lege athletics to student debt, but it’s Scarborough explain it. that trash thing that’s stuck with me. “Thirty years ago, one of my mentors If this method is indeed the “most reli-
able indicator of effective leadership,” I will be scattering candy wrappers, chip bags and Slim Jim wrappers around the Crain’s newsroom before the next job interview. But the lesson is broader, and we all know it. It’s the tremendous power of the “little things.” Truth is, they are hardly little. They are huge. They may be the correct answers to life’s bigger unwritten test. Sending a note to a colleague after excellent work, calling a client who postponed a meeting because of a sick child, flashing a smile of understanding (backed with a generous tip) to a harried server, giving up the close parking space to the car behind you, sending pizza to the IT team for getting the servers up so quickly — the list is endless. What makes them not-so-little things is that they are examples of pure empathy and/or selflessness. They are done for someone else or something greater. They are, in fact, the biggest things. The people who do them regularly are the people we all want to work with. Scarborough may have entered the president’s office in Akron as “the other guy, not Jim Tressel.” But he seems well on his way to building a championship culture. And a litter-free campus.
TALK ON THE WEB Re: GOJO’s planned expansion So happy to see this state tax credit help for GOJO, which is a fast-growing, community-based company doing business worldwide. — Tim Kloos
Re: Millennials in the workplace As an employer, I spend countless hours with my HR team developing strategies on how to keep millennials. We are a pretty old school manufacturer when it comes to how we run our business. We have machines that
produce parts, and we need people to operate them and inspect parts. We need folks to show up to work! That is our biggest problem — attendance issues. I recall growing up wanting to have perfect attendance. Where have those days gone? — Darrell
Re: Uber enters Akron market
Darrell, that’s because manufacturing is not deemed as “hip or cool” (using our generation’s language) as working in a white-collar environment. Your issue of attendance has been going on for more than recent history. There has been a decline in work habits since the ’70s. — Melvin Gaines
Add some comfort food, a bowling alley and a high-stakes card game, and you will have recreated the Athletic Club. — Robert Salmon
Caveat emptor. — Frank Dzurik
Re: YMCA planned for Galleria
Re: Future of Cliffs Natural Resources Casablanca Capital, which has taken
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PERSONAL VIEW
Rerouting the Public Square plan By HOMER S. TAFT
Public Square needs a makeover. More green and people space and less pavement are needed. However, the current plan may prove a costly mistake. This plan would close off two of the most important arterial streets in Cleveland — Ontario and Superior. Aside from challenging public transit after spending large sums on the Euclid HealthLine, it probably will cause a traffic-snarled “wall of steel” traffic square for cars and trucks. Accurate, complete traffic studies appear not to even have been done yet. We need to take a very deep breath, stop the rush and come up with a much better idea. We also need to assure that those traffic studies are open minded and thorough without seeking to prove preconceived solutions. As one contribution to that conversation, Public Square should be expanded by moving west along Superior and possibly north along West Third Street. East Second Street should be closed, the northwest half of West Second closed, and Superior and Ontario limited to a curb bus lane and center car lane (no left turns allowed except buses). At least as much or more green space would be provided in the square by the closure of East Second Street. The closure of West Second between Rockwell and Superior would join the northwest quadrant of the square to a larger public gathering space currently occupied by a parking lot. Large, green public spaces or ur-
Taft is a semi-retired attorney, real estate property manager and former CEO of a local manufacturer. ban areas such as Millennium Park in Chicago, Central Park and the High Line in New York have served as stimulus for major private investment and redevelopment. Enlarging Public Square to a new mall along Superior to West Sixth could prove to be a similar stimulus. At the same time, sorely needed parking for the area and the new Convention Center development and hotel could be provided below ground, along with a below-grade transit center to meet RTA’s needs. An all-weather pedestrian friendly connection from the Terminal Tower complex to this transit center and north to new developments would be a good addition. If possible, connecting the public transit center to the RTA Rapid station and the lower level of the Detroit Superior Bridge along with pedestrian/bike access would enhance the project. In a best-case scenario, the parking lots along West Third Street would be replaced by a green mall with underground parking connected to the Justice Center, the West Sixth District and new development. This would allow overflow parking for the Convention Center complex and allow Huntington Garage to serve the Convention Center hotel and complex more fully. The larger Superior or West Third mall areas would easily provide
more public gathering and event space than the current Public Square plan, and probably at less construction cost for the actual public space, though admittedly a greater cost for land acquisition and underground construction. However, the increased economic activity surrounding a new “miniemerald necklace” of public space could well justify the expense and make Cleveland a better, more livable city for decades to come. We must not take a business and car unfriendly solution to Public Square, but improve and expand upon it. The stakeholders in downtown Cleveland, including our public transit advocates, need to insist on a plan that retains the ability to provide our most important transit nexus and two of the very few arterial streets that allow passage between east and west and north and south. Ontario and Superior can have limited lanes and gently graded curbs with broad public bikeways/walkways while expanding the open space. RTA already has expressed some concerns and can’t quantify the delays and costs to public transit. This is especially true after we have throttled down Euclid Avenue with the public transit corridor. Presently, we are rushing to a predetermined result without a thorough, current traffic and transit analysis even being completed. Real public input has been inadequate. The cart is being put before the horse to forward a plan less than optimal for accommodating all stakeholders and users.
TALK ON THE WEB (CONTINUED) control of Cliffs, has no experience running a mining and coal company. They’re going to run Cliffs into the ground, but not before disassembling it and selling the parts at bottoms of a commodity cycle. — CLF Trader
Re: Browns in 2015 Why anyone would pay to see what likely will be a 4-12 team this season is beyond me. — Escaped Lorain
Re: An offensive cartoon I realize that it has been nearly 39 years since the tragic sinking of the Edmund Fitzgerald in Lake Superior, but Crain’s Aug. 25 editorial cartoon, using the ship to represent
the political fortunes of gubernatorial candidate Ed FitzGerald, is still in bad taste. — James Hammer
Re: The future of law school Having practiced in Cleveland for over 40 years, I can attest that we need more quality from our law schools, not more numbers. It is obvious to any observer that there are too many law schools. We should not be using taxpayer money to support the weak ones. — Lance B. Johnson
Re: Still missing Dots I looooooooooove Dots and was heartbroken when it closed in the
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Re: The value of immigrants We can’t right the economic ship without more help. Immigrants, past and present, tend to be entrepreneurial, so they often open small businesses in areas that need them. They also usually work awfully hard and take little government support. Refugees also have a positive effect economically. — mcpierogipazza
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SEPTEMBER 8 - 14, 2014
TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.
LIENS FILED AMERICAS RECOVERY SOLUTIONS LLC 7550 Lucerne Drive, Suite 207, Cleveland
ID: 51-0643599 Date filed: July 18, 2014 Type: Employer’s withholding, corporate income Amount: $29,995 C & D TRUCK & EQUIPMENT SERVICE INC. 4015 Jennings Road, Cleveland ID: 34-1187767 Date filed: July 18, 2014 Type: Employer’s withholding Amount: $27,486 SECURITY MANAGEMENT GROUP INC. 3740 Euclid Ave., Cleveland ID: 26-3798129 Date filed: July 18, 2014 Type: Employer’s withholding,
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Congratulations, Cuyahoga County, on your new home. In 2012, CBRE was fortunate to be engaged to assist Cuyahoga County with its Real Estate Consolidation Project. After just 2 years, we saw the ribbon cut on the new HQ this summer – only WKH QG RIÀFH EXLOGLQJ FRQVWUXFWHG LQ 'RZQWRZQ Cleveland in the last 20 years. The consolidation will reap tens of millions of dollars in savings for taxpayers. We’re also thrilled at the other outcomes – including the revival of Euclid and East 9th with The 9 Project by Geis, the groundbreaking of a new Convention Hilton that helped attract the 2016 RNC, and many other soon-to-be announced GHYHORSPHQW SURMHFWV IRU UHVLGHQWLDO RIÀFH QRQ SURÀW DQG HGXFDWLRQDO XVHV
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unemployment Amount: $22,435 FAMILY FOR LIFE FOUNDATION LITTLE SCHOLARS 7115 Woodland Ave., Cleveland ID: 45-4976611 Date filed: July 18, 2014 Type: Employer’s withholding, unemployment Amount: $21,987 TERRA SERRA LLC CAFE AH-ROMA 38 W. Bridge St., Berea ID: 34-1943631 Date filed: July 18, 2014 Type: Unemployment Amount: $20,694 KSK HEALTH SERVICES LLC 7530 Lucerne Drive, Suite 208, Middleburg Heights ID: 45-1261120 Date filed: July 18, 2014 Type: Unemployment Amount: $20,265 B & M LUNCH SCHOOL PROVIDERS LLC 15116 Lake Shore Blvd., Cleveland ID: 30—0457400 Date filed: July 18, 2014 Type: Employer’s withholding, unemployment Amount: $19,620 FIRST FRUITS CHILD DEVELOPMENT CENTER 3 21933 Euclid Ave., Euclid ID: 45-3304844 Date filed: July 18, 2014 Type: Employer’s withholding, unemployment Amount: $19,481 HALO PROPERTIES LTD 6659 Pearl Road, Suite 203, Parma Heights ID: 38-3720218 Date filed: July 18, 2014 Type: Failure to file complete return Amount: $17,456
LG AMERICA INC. 25200 Miles Road, Suite 4, Bedford Heights ID: 01-0838023 Date filed: July 18, 2014 Type: Employer’s withholding Amount: $14,522 CKUNI INC. 2 MARATHON 7400 State Road, Parma ID: 56-2367562 Date filed: July 18, 2014 Type: Employer’s withholding, unemployment, failure to file complete return Amount: $14,329 BRIGHTON HOTEL CORP. 18401 N. Park Blvd., Shaker Heights ID: 34-1538032 Date filed: July 17, 2014 Type: Corporate income Amount: $14,040 New Hope Specialized Services LLC 13951 Progress Parkway, Suite A., North Royalton ID: 80-0690155 Date filed: July 17, 2014 Type: Unemployment Amount: $13,990 FI DELI EXPRESS INC. DELI EXPRESS FOOD STORES 7893 W. 130 St., Parma ID: 13-4347333 Date filed: July 17, 2014 Type: Employer’s withholding Amount: $13,692 MICH-ALTA MANAGEMENT LLC 1332 E. 82 St., Cleveland ID: 27-2021250 Date filed: July 18, 2014 Type: Employer’s withholding, partnership income Amount: $12,613 BSRW STAFFING AND MANAGEMENT LLC 2302 Hamilton Ave., Suite 201, Cleveland ID: 27-3630074 Date filed: July 17, 2014 Type: Unemployment Amount: $12,049 DANCE STUDIOS OF CLEVELAND INC. AMERICAN BALLROOM CENTRE 5673 Ridge, Road, Cleveland ID: 34-0667567 Date filed: July 17, 2014 Type: Employer’s withholding Amount: $11,869
C & CS CORNER TAVERN INC. 17910 Lake Shore Blvd., Cleveland ID: 34-1781522 Date filed: July 18, 2014 Type: Employer’s withholding Amount: $11,013 GEORGE DIXON CORP. LANCER STEAK HOUSE 7707 Carnegie Ave., Cleveland ID: 34-1657828 Date filed: July 18, 2014 Type: Unemployment Amount: $9,501 BIDDER TRANSPORT INC. 3565 Glen Allen Drive, Cleveland Heights ID: 34-1554376 Date filed: July 17, 2014 Type: Employer’s withholding Amount: $9,187 THREE B MANUFACTURING LLC 13005 York Delta Drive, North Royalton ID: 20-3541565 Date filed: July 18, 2014 Type: Employer’s withholding, unemployment Amount: $8,995 POSH NAILS & SPA LLC 14189 Pearl Road, Strongsville ID: 27-3471958 Date filed: July 18, 2014 Type: Employer’s withholding, unemployment Amount: $8,110 D K Briardale Insurance Agency Inc. 11221 Pearl Road, Suite 2, Strongsville ID: 65-1193082 Date filed: July 17, 2014 Type: Employer’s withholding Amount: $7,312 C R S CO. INC. FAITH CHRISTIAN SCHOOL & DAY CARE 11089 W. Sprague Road, North Royalton ID: 34-1741604 Date filed: July 17, 2014 Type: Employer’s withholding, corporate income Amount: $7,062 SCOOP SHOPS OF UNIVERSITY HTS INC. 20650 John Carroll Blvd., Cleveland ID: 34-1942935 Date filed: July 18, 2014 Type: Employer’s withholding Amount: $5,871
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SMALL BUSINESS Aspiring for bigger and better things Entrepreneur with established design and marketing firm turns efforts to nonprofits and aims for national reach By CHRISSY KADLECK clbfreelancer@crain.com
17 years of running a successABrianfter ful design and marketing firm, Sooy was compelled to create a deeper, more meaningful legacy for his work and his life. That inner passion drove the 53-year-old to reinvent his five-person firm, Sooy+Co., and as he calls it, “Go big.” “Success is temporary, but significance endures,” says Sooy, a thoughtful and reflective leader who in September 2012 launched Aespire, a practice serving the nonprofit and philanthropic sectors. “I selected the name Aespire because it sounds like aspire, which means to direct one’s hopes or ambitions toward achieving something,” he said. “Aspire is a verb, not a noun. Aespire helps our clients inform, inspire and engage their audiences. It’s active, never passive.” In addition to fitting well with nonprofits that work toward a higher goal, Aespire was a name that Sooy knew could work nationally and not be tied to his identity. “Overall, my approach is designed to move us beyond working within the Northeast Ohio region, and to expand our presence …,” he said. “Aespire is a conscious effort on my part to think ahead to my legacy, moving from success to significance, although I’m still very intent on pursuing success.” His motivation is powerfully simple: to do work that really matters.
2ND STAGE
A natural progression Sooy, who knew he wanted to focus the talent and skill of his firm on significant work with nonprofits, foundations and grantmaking organizations, devoted 12 months of planning to lay the groundwork for the launch. Sooy said he came up with the name in early 2011 and discussed it with his wife and business partner,
JANET CENTURY
Brian Sooy launched Aespire in September 2012. Lisa. He had almost forgotten about it until he received an email on Thanksgiving Day 2011 saying he had secured the Aespire domain name. “From that point on, I started to plan,” he said. “We worked on tactical pieces, such as a new website, and positioning statements on what was the unique space that we want to occupy in our audience’s mind, in what we do and how we
do it.” It was a process that took six to eight months of working with a consultant. “What I came to, is we believe mission-driven design is a catalyst for cause communications,” he said Of course, such a rebranding can be a double-edged sword, said Casey Newmeyer, assistant professor of design and innovation at the
Weatherhead School of Management at Case Western Reserve University. “I think the rebranding makes it easier to get into the new business because you are leading with a new foot and a new brand image,” said Newmeyer, a branding expert. “But it is very challenging especially if you want to maintain some of your existing customers because it does create a lot of questions about why
they are changing the name and if they are still offering the same services.” Sooy admits he did stumble in the beginning, first making a big announcement that Aespire would be a new company. The initial launch caused an immediate buzz among the firm’s clients. “I realized a few months into that, that it wasn’t operationally See ASPIRING, page 18
Q & A: MATTHEW K. HLAVIN By RACHEL ABBEY MCCAFFERTY rmccafferty@crain.com
Avon Lake-based Thogus has doubled its work force and spun out three new companies since Matthew K. Hlavin became the company’s president in 2008. Hlavin, who was promoted to CEO in 2013, has been working to reinvent the molding company into an advanced manufacturer, making investments in technology, automation and 3D printing equipment. Marketing manager Dana Foster said Thogus had about 95 employees in 2008, but Hlavin had to make some cuts to restructure the company and make it more efficient. In 2009, Thogus had 51 employees.
By 2014, however, that number was up to 184 at Thogus and its three new businesses. As new employees have been hired, a focus has been to bring on engineers with different backgrounds and areas of expertise, instead of temporary workers, Foster said. That’s allowed Thogus to develop different solutions for customers, ultimately leading to its spin-off businesses: rp+m, which offers 3D printing and engineered solutions; JALEX Medical, a medical device design and consulting business; and RPT, which makes products for medical imaging. Crain’s recently asked Hlavin to answer a few questions regarding his business and its evolution.
How do you foster a spirit of innovation at your companies? Every employee has a voice. We’ve created a culture where every employee directly and indirectly impacts our business from day one. We encourage anyone that has an idea to team up with engineering and develop the concept. Our 3D printing machines are available for every employee to develop ideas, solutions and products. How do you keep employees engaged? Constant communication: We have See Q & A, page 17
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CRAIN’S CLEVELAND BUSINESS
ADVISER
WWW.CRAINSCLEVELAND.COM
DANIEL L. MESSELOFF
SEPTEMBER 8 - 14, 2014
TAX TIPS
PETER A. DEMARCO
Keep track, or it could be costly Here’s a tax break Earlier this summer, the city of Cleveland settled a lawsuit brought by an employee who claimed that the city improperly rounded the time employees clocked in and out of work. According to the lawsuit, for almost 25 years, the city’s timekeeping system had been programmed to always round employees’ time in the city’s favor, rather than to round their time neutrally, thereby giving the city several minutes of “free work” by many of its employees every day. The city was forced to pay thousands of its current and former employees approximately $2.2 million to settle the lawsuit. Employers can learn many lessons from the city’s timekeeping practice. Three of the most important lessons are: Mistakes with respect to employees’ wages and hours are easy to overlook; these mistakes do not have to be noticeable to be costly; and if these mistakes are not diligently searched for and corrected, they can be very costly. Because there are many laws and regulations regarding employees’ wages and how to pay them, it is easy to make mistakes, and many employers do make one mistake or another. Here are some of the most common mistakes, and how to fix them:
sure that every employee whose time is being deducted is actually taking a lunch break; if you don’t, you may be required to pay employees for the time that was deducted. To avoid timekeeping issues, you should require employees to sign their timesheets at the end of each week, to confirm that the time for which they are being paid is accurate and to make any corrections that may be necessary.
■ Ensure your timekeeping practices are lawful: What the city learned the hard way is to ensure that your timekeeping practices are lawful. For example, if your timekeeping system rounds employees’ time to the nearest quarter-hour, make sure that the rounding system is neutral and is not programmed to round all time punches in the company’s favor. Similarly, if your timekeeping system automatically deducts time for employees’ lunch breaks, make
■ Misclassification of salaried employees as exempt from overtime compensation: Many employers pay their employees a salary and proceed to have these employees work more than 40 hours a week under the belief that, because they are paid a salary, they do not have to pay overtime compensation. This belief — and the practice — generally is incorrect. Although some employees may earn a salary because of the work they do, whether employees are en-
Messeloff is an attorney with the Cleveland office of Jackson Lewis P.C., a national labor and employment law firm. Messeloff concentrates in wage-and-hour claims, discrimination claims and other employment issues. He can be reached at Daniel.Messeloff @JacksonLewis.com.
titled to earn overtime compensation depends on the work that they perform, not on whether they are paid a salary. In brief, the law generally allows executives, administrative employees and certain other “exempt” categories of employees not to be paid overtime compensation. However, each of these categories has a strict definition under the law. If salaried employees perform manual work, or work that is similar to work being performed by hourly employees, the employer may be subject to a claim for “misclassification,” meaning that the salaried employees were improperly misclassified as exempt from overtime compensation. To avoid misclassification claims, companies should both review employees’ job descriptions (or create job descriptions, if none exist) and interview employees in the positions and their managers to confirm that the work actually being performed by these employees complies with the law. ■ Modern versions of requiring employees to work off the clock: Finally, companies should also ensure that none of their hourly employees are working “off the clock” and performing work without being paid for it. Traditionally, off-the-clock work meant employees who were required to either perform work before they clock in for work or perform work after they clock out. While this definition still applies, and this practice should be avoided, employees’ use of smart phones and telecommuting policies has brought off-the-clock claims into the 21st century. In particular, hourly employees’ after-hours use of smart phones for work purposes and other work performed from home may constitute compensable work, and they should be paid for such time. To avoid off-the-clock claims, make sure your company has a written policy that instructs employees to report all hours they work and prohibits them from working off the clock in any way. As with other timekeeping issues, employees should sign their timesheets, thereby acknowledging that their timesheets reflect their actual time worked. While these measures take time and may be complicated, the time you invest now in learning from the city of Cleveland’s mistake could save you millions of dollars in the future.
that’s actually free In business today more than ever, it’s difficult to find anything that’s truly free. Even tax breaks come at a cost. Reductions in income tax in the form of credits or deductions are usually tied to some kind of increased spending for the taxpayer. If a business taxpayer increases an investment in equipment or research activities, for example, there might be a tax benefit to doing so. There’s one tax incentive for manufacturers, however, that’s truly free. It’s a straightforward reduction in the taxes that a manufacturer has to pay, simply because the business makes or produces something. The tax break is often called the “Section 199” deduction, which refers to the section of the Internal Revenue Code where the deduction is explained. Anecdotally, it seems as if some manufacturers may be unaware of it or may be overlooking it when filing their tax returns. Yet it’s one of the simplest tax benefits to claim. Section 199 allows a deduction for any type or size of company that somehow manufactures, produces, fabricates or assembles goods in the United States. The deduction is equal to 9% of a company’s “qualified production activities income” or taxable income, whichever is lower. The QPAI number is carefully defined and calculated, but it represents the income a manufacturer generates as a result of its manufacturing activities. Even for smaller companies, that deduction can quickly become a sizable number. Imagine a small manufacturing or fabricating business has net taxable income of $200,000. The Section 199 deduction allows that company to take an additional $18,000 off the top of that taxable income, so the company’s taxable income is reduced to $182,000. Assuming a common corporate tax rate of 34%, that means a direct tax savings of more than $6,000. If the company is organized as a flowthrough entity, such as an S corporation, a partnership or a limited liability company, the tax savings will flow through to the owners on their per-
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DeMarco is vice president and director of tax services for the regional accounting and consulting firm of Meaden & Moore, headquartered in Cleveland. sonal income tax returns. The tax analysis can get a little tricky when companies are involved in contract manufacturing arrangements, where one company hires another company to perform manufacturing or fabricating activities under contract. The Internal Revenue Service has made clear that only one company can claim the deduction for the production of a given product. Assume, for example, that a company is in the business of selling a specialized valve based on an innovative design that it has developed, but it contracts some of the manufacturing to another company and performs only a finishing assembly process before delivering the valves to its customers. The IRS determines that valve to be one product, even if it was produced by two different entities. As such, the IRS has established various tests to determine who should get the deduction under that scenario, based on factors like who has title to the goods or materials, who shoulders the risk of loss and who carries the insurance, among others. The idea behind the deduction, of course, is to provide an incentive for companies to manufacture or fabricate goods in the United States rather than relocating or offshoring those activities to lower-tax jurisdictions. That’s a raw subject in Congress these days, as global companies increasingly are re-evaluating where they should do business in light of the historically high corporate tax rates in the United States compared with other countries. For small companies, however, that are doing business locally, the Section 199 deduction is a bit of a “no-brainer.” It’s hard to fathom any reason a smaller manufacturing or fabricating business in the United States would deprive themselves of such a straightforward tax benefit.
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Q&A continued from page 15
monthly communication meetings with everyone in the company and share what is going on inside our company, what is going on in our industry and customers’ businesses, and local, national and global economic conditions. Culture: Creating a culture that is enjoyable for our employees. Our employee relations team brings in food trucks, has monthly birthday celebrations, family events at the Crushers’ stadium and monthly raffles (last month, we raffled off a Vitamix blender). Matt’s Chats: Monthly forum for small groups from across the company to talk openly about anything. Wellness program: We have instituted an internal wellness program by installing a workout facility on property, as well as an off-site facility that is free for every employee to train. We have partnered with T3 Performance to have personal trainers, yoga instructors and nutritional therapists to create programs for changing the well-being of our team. We have built a continuous improvement team that focuses on identifying education and training opportunities and creates curriculum that is specific to our business. Are you doing anything to attract the next generation of manufacturing employees to your companies? Our doors are always open and we
are constantly working with educational partners from middle schoolaged through college institutes. We have partnerships with LCCC (Lorain County Community College), Cleveland State University (CSU), CWRU (Case Western Reserve University), Penn State Behrend, University of Michigan, the Ohio State University, as well as Lorain County JVS. I sit on the advisory board for Lorain County Community College’s Fab Lab, and the board for Cleveland State University’s Foundation and Case Western Reserve University’s Think[box]. We developed a STEM design competition with schools from the SWC (Southwestern Conference). Our engineering manager at rp+m, Patrick Gannon, helps teach an introductory engineering class at Case Western Reserve University. We have invested in advanced manufacturing software and technology that has made manufacturing a technology-based company and also made manufacturing “sexy” again. What do you think are some of the main differences between running an established company and starting one from scratch? What are some challenges you’ve faced in each situation? An established company has systems and processes that have been created. While systems and processes need to be changed to
evolve, the foundation is in place. Established companies have a culture in place, while startups need to identify themselves with their own culture. Startup companies may seem a little more chaotic at times while they try to define their mission and overall offerings and solutions to drive revenue. Overall, what are some of the main lessons you’ve learned since becoming CEO of Thogus? As the owner and leader, you’re not only responsible for you and your employees, but also your employees’ families, customers and their families and suppliers and their families. You are defined by the people you surround yourself with. Humility, honesty and high integrity are critical. Empower great people and allow them to fail, learn and succeed. Remember to celebrate successes. Mentor, support and pay it forward. Guiding principles: Do what is best for your company, your customer and your suppliers. You have to look yourself in the mirror each day and know that you have done what is right and have no regrets. If you make a mistake, you are one decision from righting that mistake; know that and own that; Life is a journey. Take the time and enjoy the journey as you only have one time to experience it.
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Q & A: BRIAN SOOY
continued from page 15
going to work and did a subtle reposition as this is more of a division of, or separate practice of, Sooy + Co.,” he said. “I didn’t execute on it as well as I could have and ended up creating some confusion with our clients. I still think it causes a little bit of confusion.”
Carving out a space Julie Chase-Morefield, executive director of Second Harvest Food Bank of North Central Ohio, said her organization started working with Sooy+Co. almost 10 years ago, initially to redesign its website. “We were looking for someone who could give it a different, new look,” she said. “I contacted Brian and the rest is history. Sooy + Co. not only revamped our website but helped us to reimagine everything about the public face of our organization from our logo and tagline to all of our collateral materials down to the designs on our trucks.” Sooy’s decision to specialize made “perfect sense” to ChaseMorefield. “He understands the sector and has taken the time to think about what motivates people. But also be-
cause he encourages others to be part of their community, in whatever cause is important to them, and give back their time, talent and treasure,” she said. “Our relationship with Aespire has allowed us to educate our community on who we are and what our role is in hunger relief,” she said. “Having a long-term relationship with a firm who has truly taken the time to understand our cause has made all the difference.” Specialization, while not completely uncommon, does offer Sooy a potential edge in the marketplace, CWRU’s Newmeyer said. “The brand image of nonprofits is even more important than a forprofit because the brand image has to align with the mission and vision and values of the (organization),” Newmeyer said. “The organizational structure is different. You are dealing with a board of directors instead of a CEO,” she said. “The chain of approval is very different and typically (an organization) has … to be able to justify why they are spending money on marketing and branding and how that is helping the organization and the cause as a whole.”
New focus, new clients Sooy, a graduate of Lorain County Community College and Bowling Green State University, said specializing has attracted new clients such as the Wyoming Humanities Council, the Community Foundation of Lorain County and the Nord Family Foundation, among others. “A good 60 to 70 percent of our firm’s total business is working with these types of organizations,” he said. “Within this two-year space we have seen about a 50% increase in this work and definitely new opportunities such as our growing presences in the community college space.” Sooy+Co. remains a generalist firm working with clients in the private sector, and Aespire specializes in working with the higher education, philanthropic and nonprofit sectors. “There are also the aspects of working with companies that want to be purpose and mission driven who are for-profit companies and we see great strengths within what we do to help them align purpose and profit together,” he said.
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Did you ever have a fear of specializing? Every day is a fear of ‘have I made the right choice,’ but as a colleague of mine once explained it, “When you walk through that one door of specialization, you realize that the next room is full of doors.” So there are so many more opportunities. Specializing helps you actually, I think find audience more effectively. When you are a generalist, who are you going to talk to? Everybody. Well, when you are trying to be all things to everybody, you’re really less meaningful to everybody. It’s a relatively small number of firms nationally that specialize, but it helps me understand exactly who my competition might be and it makes it so much easier to identify prospective, potential clients. You’ve said you plan to retire the Sooy+Co. name in 2015 — the company’s 20th year in business. Why? How many small businesses do you know that last 20 years? I think it’s a great time for celebration, and it’s a great time to announce that after 20 years of successfully operating this company that we feel this new practice has such great potential that we want to operate solely as Aespire. We are not going to drop any clients, but what we will do is make it very clear (to our for-profit clients) that we want to help them identify their purpose and perhaps add more value to their business. Any words of wisdom for others looking to reinvent themselves? Be courageous. When I think back on the whole journey … again, it had been 17 years and I could have just
continued and stuck with Sooy+Co., but this idea of reinventing … and the phrase my colleague used, “If you have the courage to reinvent yourself, go big.” And for me, I’m just going big. So big is beyond Northeast Ohio for me. Big is writing a book. I’ve got that under my belt. Not that it’s a done process, I’ve got a large number of books to help promote and sell, but it has given me a platform to start building on — a foundation for so much more. I really see. Now, I’ve got 20 more years to build something even bigger than what I had initially ever imagined. Tell us about your book, “Raise Your Voice: A Cause Manifesto” and why you wanted to write it? I wrote it from my perspective as a design professional, nonprofit board director, volunteer and donor. “Raise Your Voice” is written for leaders who seek to be intentional about aligning their mission-driven outreach with their audience, and communicate to the outcomes they seek to achieve. It’s a book about intentional design thinking, communicating with clarity and leading with purpose. Creating this very meaningful content also gave me a national voice that draws people to our website and broadens our exposure as well as opens doors to potential speaking opportunities and other writing opportunities. A key component of my long-term positioning strategy has been the articulation of a unique perspective from which we work, and concentration on developing thought leadership that we share through our blog, writing for national publications and seminars. — Chrissy Kadleck
This year, Crain’s Cleveland Business is featuring small businesses and their second-stage journeys. The stories will focus on smaller entities that have moved beyond — or are trying to move beyond — the startup phase. If you have a suggestion for a business or topic related to second-stage growth, contact Amy Stoessel at astoessel@crain.com.
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Fitting fashion needs — even if they have to come to you By JUDY STRINGER clbfreelancer@crain.com
When the three Js of J3 Clothing Co. set out to open a men’s boutique six years ago, they had a few things going for them. Timing was not one of them. The trio delivered their business plan just as the Great Recession and financial collapse hit in 2008. “Within 30 days, our entire financing package evaporated,” said JB Dunn, co-owner of the Moreland Hills-based men’s store. What Dunn and partners Jack Madda and Joe Paster did have going for them were decades of experience in men’s clothing and, along with that, a very loyal customer base. Collectively, the Ohio natives have more than 65 years of experience in men’s wear, including Barneys New York and James Clothiers. They approached some of their major clients with the boutique proposal, ultimately convincing about 20 of them to put up $1 million and opening the doors of J3 on Sept. 1, 2011. In the three years since, Dunn said he has been shocked by overwhelming support from existing clients and new ones who stroll into the 3,000-square-foot retail floor. The company hit its six-year sales growth target in the first year of operation. This month, Esquire magazine ranked it No. 3 on its list of the 11 best men’s stores in the country.
Fashioning a following Products at J3 range from underwear and socks to contemporary sportswear and high-end finery from the likes of Giorgio Armani and Eidos Napoli. Nothing is inside a case, a design intended to create an open and welcoming ambiance. And, Dunn said, the store owners pride themselves on keeping it stocked with innovative products customers won’t find at competing outlets. Recently, financial backing from
local business leaders and bankers, including Huntington Bank, has allowed the J3 partners to augment the store’s “back-of-the-house” to accommodate five full-time tailors. “We actually have more tailors than we have sales people,” Dunn said. “We are much more interested in creating a long-term relationship than we are interested in making a quick sale.” Those relationships are evident on sunny Saturday afternoons, when a handful of men — many fresh off local golf courses — will gather in the store’s lounge to watch golf on TV and have a beer. But, it extends beyond J3’s glass doors as well. J3 delivers garments and even will go into the closets of clients to weed out dated styles or change clothes over from one season to another. “We know that our guys, primarily executives but a very diverse group of guys, are very busy and time is important to them. So if we can take anything off their plate and do it for them, we do that,” Dunn said. The laser focus on customer service is what sets J3 apart from its competitors, according to Jimmy Richmond, a sales rep for the luxury shoe line Donald Pliner. Along with constantly evolving product lines and regular house calls, the partners are masters of networking, he said, and have a keen understanding of their customer base. “When I do trunk shows (at J3), none of their clients will buy a shoe without getting their blessing first,” Richmond said. “I don’t care if you are 30 or 60, men today want to look good. They want to invest in clothing that is fresh and new, and that is what J3 offers.”
Looking good Indeed, J3’s timing isn’t so bad. Industry watchers say men are spending more on looking good. Part of that has to do with economics, said Will McKitterick, a retail an-
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alyst at IBISWorld. Now that the financial crisis has eased, Americans have more discretionary income and men are cracking open their wallets to satisfy “a pent-up demand for new clothing,” McKitterick said. As a result, he projects the $9.6 billion U.S. menswear industry will grow to $11.2 billion by 2019. Another catalyst is the mindset of young millennial men, who are savvier about style and clothes than their previous cohorts, said Tiffany Hogan, a Columbus-based apparel analyst with consulting firm Kantar Retail. “Marketers see this, and they are starting to target men’s apparel as a whole and reinforce the trend,” she said. “A lot of businesses are growing their menswear lines and department stores are expanding their men’s departments … There are some talks of starting a separate men’s fashion week in New York City, although nothing has materialized yet.” Dunn said that J3’s early success has come from rethinking what it means to be a men’s shop much more so than catering to the fashion whims of millennial shoppers. His typical client is established and a bit older chronologically, but has a young “state of mind,” preferring a sleeker and more youthful clothing fit than his father wore. Put those looks and a knowledgeable staff into a welcoming atmosphere and, Dunn said, just like the adage from “Field of Dreams” — they will come.
KEITH BERR
From left, JB Dunn, Jack Madda and Joe Paster — owners of J3 Clothing Co.
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the unpaid bills and taxes when Mack missed work one day. (The date was not specified.) The CFO resigned June 20, the suit stated. Mack did not return calls to his Independence home. Asked separately about the CFO lawsuit, Feuer said through an assistant that the CFO situation had no bearing on closing the stores. Instead, in an earlier phone interview, Feuer focused on how surprised he has been by the metamorphosis in store-style retailing. “Once we got into the business, the sad part is that retailing as we know it is changing,” Feuer said. “What we found was that the stores were way too big and costly to operate. I think retailing — and not just Max-Wellness — faces radical changes” in the next decade. Affiliates of Cleveland-based Stark Enterprises, which operates Crocker, and Woodmere-based Kertes Enterprises Inc., which operates the 27730 Chagrin Blvd. location, seek unpaid rent and the re-
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turn of space to their control in lawsuits filed Aug. 12 and July 30, respectively. The Chagrin landlord seeks $36,000 in unpaid rent for April and May, according to its suit. Stark’s lawsuit includes a letter saying the retailer owes $16,654 in unpaid rent for June but would demonstrate the volume of its claim later. Randy Kertesz, president of Kertes Management, declined comment. Steve Rubin, Stark’s chief operating officer, said he could provide no information on the matter. All the lawsuits are too new for answers by defendants to be filed.
Size trumps smarts Feuer declined to say what format is next for Max-Wellness, citing the litigation. Other potential avenues are apparent. Since inception, Max-Wellness has operated a website, www.maxwellness.com, to sell the products. The website now says, “We are changing our format and have closed our big brick & mortar stores.
Denise Donaldson (216) 522-1383 (216) 694-4264 DDonaldson@crain.com
Continue to shop online.” Max-Wellness also has experimented with a type of kiosk for hospitals, supermarkets and retirement communities. Although Feuer said he likes niche retailing in a small format, he declined to discuss whether those might provide the next channel for Max-Wellness because he thinks the segment is attractive. What Max-Wellness describes as a “mini-store” concept of just 500 square feet had its debut last November at Moorings Park, a retirement community in Naples, Fla., that remains open. “I’ll just say we like health and wellness,” Feuer said. Each of the closed bigger stores employed less than four people who received severance pay, Feuer said. Since the debut of Max-Wellness, sales of the same health and wellness products by other retailers, from Target to drug and grocery stores, have mushroomed. Retail experts say the market is continuing to grow — as well as becoming more competitive. “They don’t have more smarts than we do,” Feuer said of the established national chains. “They do have more money.”
New retail world order Outsiders point to multiple reasons that may account for why the Max-Wellness retail venture, with its stores of 4,000 to 5,000 square feet, stumbled. Most cite the growth of online shopping, as well as the change it has made in the mentality of consumers. “Consumer behavior has changed significantly,” said Doug Stephens, president of the Torontobased Retail Prophet consultancy. “We are living with the scars of the financial crisis. As a result, consumers are making more deliberate decisions about when and where we share our money. Consumers now operate under the idea they have the universe of selection in the phone in their hand.” That changes the way consumers respond to products in stores. “They feel they are no longer compelled to accept the products that a retailer puts before them,” Stephens said. “Those things are making retailing even more difficult than it was 10 years ago.” Max-Wellness puzzled one retail expert from the get-go. Elad Granot, an assistant dean at the Monte
REAL ESTATE
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Ahuja College of Business at Cleveland State University, said he never grasped from the outset the point of difference and competitive edge that Max-Wellness stores needed to survive in today’s retail climate. “Why will you venture from your cozy home to go to a store which doesn’t provide a greater selection of products or services than you can get online? The same packages are for sale online,” Granot said. Instead, Stephens said, retailing over the last 10 years has changed from being a mechanism to distribute products to a means to distribute experiences for shoppers. “What the physical store can do for me that I can’t replicate anywhere else is stage a physical and emotional experience,” he said. Feuer said, “I get it. Shopping is an important experience. The problem for any retailer is that the customer wins. I love that.” Feuer declined to say how much the Max-Wellness venture cost him. “In business, in every 10 deals, three will be good, three will be horrible, a couple will be close and one is a home run,” he said. “The largeformat Max-Wellness stores were an experiment.”
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PUBLIC NOTICE Request for Proposals
CITY OF OLMSTED FALLS
Wed., Sept. 24, 11 AM
The City of Olmsted Falls is seeking proposals for use of two City-owned properties through lease agreements: Property 1: Third floor of O.F. City Hall (former school building) located at 26100 Bagley Rd. Property 2: Former library building located at 7850 Main St. Property 1 offers approx.11,000 sq. ft. A use may be proposed for all or part of the space. Property 2 offers approx. 5,300 sq. ft. on three levels. Olmsted Falls’ goal is to engage business activity that will enhance the commercial vitality of the community, and generate income tax revenue for the City. Acceptable proposals will require final negotiations with the City of O.F. with the intent of entering into a lease agreement for a period of time to be determined. All proposals must be submitted in accordance with the Request for Proposals (RFP) document. Proposals should be submitted by 4:00 pm on Fri., September 19, 2014 which may be extended by the City. Property may be viewed by appointment.
4.34 +/- Acres w/ bldgs.
Copies of the RFP Docs can be obtained from: Rosann Jones Dir. of Econ. Dev. City of Olmsted Falls 26100 Bagley Rd. O.F., OH 44138 440-235-5550 rjones@olmstedfalls.org
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CRAIN’S CLEVELAND BUSINESS
DINING
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SEPTEMBER 8 - 14, 2014
HOTEL RESTAURANTS THAT HAVE OPENED RECENTLY OR ARE SCHEDULED TO OPEN:
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plans for a Mediterranean-style restaurant for its planned hotel at the convention center, though details of the concept have yet to be developed before it opens in 2016. “I can tell you that Hilton supports local chefs and local restaurateurs,” said Jeff Appelbaum, an attorney who also is managing director of Cleveland-based Project Management Consultants. “This is not going to be some chain. This will be a unique restaurant designed specifically for this market and hotel. “Cleveland has a nationally distinguished food scene, and this excites Hilton.” Forming a relationship with local purveyors, understanding the region’s culinary landscape and augmenting the local market with an underserved type of cuisine all guide emerging hotel restaurant concepts.
Small-batch, artisanal Adega, when it opens this month in The 9, complements downtown’s dining scene with a Mediterraneaninspired seafood, steak and pastaforward menu that blends imported ingredients from Spain, Italy and France with locally sourced products. A 12-foot glass wine vault, chef’s table and three private dining rooms augment its individuality. “Part of our DNA is to be artisanal, small-batch, and to keep things unique and boutique,” said Keith Halfmann, chief operating officer of the newly created Geis Hospitality
ADEGA, VAULT AND LEDGER BAR AT THE 9, WITHIN WHICH LUXURY BRAND JW MARRIOTT OPERATES, OPENED: Adega is a high-end Mediterranean-inspired eatery, overseen by chef Eddie Tancredi, formerly of Table 45. The Vault is a pre-prohibition-era lounge with a 1906 bank vault door and four vaults offering handcrafted cocktails. Ledger Bar features cocktails, wine and local craft beer.
CHEF-DRIVEN RESTAURANT AT THE KIMPTON HOTEL, SUMMER 2015: Details for the eatery in this upper upscale boutique hotel have yet to be finalized, but look for an establishment similar to that of other Kimpton hotels. Award-winning chefs oversee locally driven concepts within other markets, such as Dirty Habit in San Francisco, a film noir-inspired bar and restaurant with creative dishes and inventive cocktails. “We have a talented group of chefs and bartenders at Kimpton, and they are dedicated to creating outstanding restaurant experiences that are standouts in each market we operate in,” said Tami von Isakovics, a hotel spokeswoman.
MEDITERRANEAN-STYLE RESTAURANT, HILTON CLEVELAND DOWNTOWN CONVENTION CENTER HOTEL, OPENING JUNE 1, 2016: This upper upscale hotel will feature a modern Mediterranean restaurant, inspired by venerable eateries such as the Michelin Guide-recognized Purple Pig in Chicago. The restaurant will have local chef or hospitality partner involvement. The tiered ground level-facing establishment’s carefully executed concept even trickles down to the dishes, in which traditional Mediterranean vessels such as copper bowls for mussels and relish jars for tiramisu will be served alongside china. The 32nd-floor Float bar, offering dramatic skyline views, will prepare liquid nitrogen-infused drinks, among other top-shelf cocktails. Bartenders will wear Cleveland-branded T-shirts.
Note: Smith Travel Research categorizes chain hotels into seven segments: luxury, upper upscale, upscale, upper midscale, midscale, economy and independent.
Group, a division of project developer Geis Cos. The eatery’s setting is at the epicenter of a much-anticipated luxury hotel and concierge residential complex in the historic Cleveland Trust rotunda and former Ameritust tower. Adega operates independently of The Metropolitan, a member of the Marriott’s Autograph Collection. The arrangement is similar at AMP 150, an independently operated establishment located at the Cleveland Airport Marriott. The hotel chain writes the check for AMP’s labor and food costs, but noted James Beard award-winning chef and national restaurateur Dean James Max oversees the eatery’s rotating menu of global cuisine. Chefs, therefore, have a lot
“I have guests who stay in Marriotts around the country for 250 days a year, and say they wish this type of restaurant was in all the hotels.” – Jeff Jarrett executive chef, AMP 150 of autonomy in crafting AMP’s menu. “Marriott has no say in the menu, which allows us to be more flexible and creative depending on the seasonality and availability of ingredients,” executive chef Jeff Jarrett said. “I have guests who stay in Marriotts around the country for 250
days a year, and say they wish this type of restaurant was in all the hotels.” Relationships with nearby growers and local foods provider Fresh Fork Market are critical to keeping this highway-proximate eatery on local diners’ radar. Table 45 at the InterContinental Hotel, under the direction of veteran chef and restaurateur Zack Bruell, appeals to neighboring Cleveland Clinic’s international patients and visitors as well as local Bruell fans for that restaurant’s smattering of cuisine representing each continent. “I’d also like to think of Table 45 as offering a combination of cuisine from some of my other restaurants,” with French, Asian and Mediterranean influences among those offerings, Bruell said earlier
this summer. The frenetic pace of which restaurateur Scott Kuhn has been opening restaurants — including Bin 216, Rothschild Farms, Cibreo and Hodge’s downtown — hasn’t stopped him from entering into a partnership with Twin Tier Hospitality Group to open two hotel restaurants, and possibly more. The Sanctuary: Restaurant & Wine Bars will open in DoubleTree by Hilton hotels in Beachwood (October) and Westlake (January 2015). Their menus will comprise a medley of the contemporary cuisine offered among Kuhn and partner Chris Hodgson’s Driftwood Group restaurants. “I expect that this all is part of a longer-term trend,” Hotel & Leisure Advisors’ Sangree said.
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Harbortown Marine/Harbortown Flag in Vermilion. Retail & Wholesale Marine Supplies & Accessories, Service Dept, Boat Brokerage, Flag & Pole Sales & Installation (2 stores, 1 location). Record sales 20 years continuously, even throughout recession. Expanded in 2012, put our major national competitor out of business in 2013. Turn-key operation includes inventory, furn/fixt, tools/equipment, vehicles, transferable long-term lease in shopping plaza includes many extras. Retiring owners will stay for training/transition if desired. 440-967-8072 or jody@htmarine.com for more info. Serious Inquiries Only Please. See location & virtual tour pics at www.htmarine.com.
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SEPTEMBER 8 - 14, 2014
THE WEEK SEPTEMBER 1 - 7
The big story: Goodyear Tire & Rubber Co.’s new tire plant won’t be in Ohio. Laura Thompson, Goodyear’s executive vice president and chief financial officer, wrote in a letter to the city of Akron and Summit County that building the plant in Ohio would put the tiremaker at an annual $50 million cost disadvantage compared with other locations. While the final decision isn’t expected until early 2015, Goodyear said Ohio has been removed from consideration. Goodyear in May said it plans to build a $500 million consumer tire plant to serve the North American and Latin American markets.
On the brink: Ricerca Biosciences will lay off a lot of people — or close entirely — if the research company doesn’t find a buyer for at least part of the business. Concord Township-based Ricerca has identified a few potential buyers, but there’s no guarantee that all of its employees will remain on board even if a deal goes through, said Clifford Croley, who is acting as the company’s chief restructuring officer. The contract research organization filed a letter with the state of Ohio saying it could lay off all of its 199 employees, including CEO Tim Derrington, who was hired in March. The layoffs would take place over two weeks, starting Oct. 27.
Time for a change: An Atlanta private investment group bought The Lube Stop Inc., the Berea-based quick oil change company, for an undisclosed amount. Karl Jaeger, managing director at Argonne Capital Group, said the firm “has spent considerable time trying to find the right investment in the automotive service space.” Argonne says it targets equity investments of $25 million to $75 million per transaction. Lube Stop, founded in 1985, has 250 employees in 37 locations in the Cleveland and Akron-Canton areas. He was busy: K&D Group sold three apartment complexes with a total of about 800 suites to two buyers in what Doug Price, K&D’s CEO, described as “clearing the decks” for new developments by the Willoughby-based company. Roco Real Estate of Bloomfield Hills, Mich., acquired from K&D the 399-unit Loganberry Ridge Apartments, 26720 Whiteway Ridge in Richmond Heights, and the 300-unit Parkside Gardens Apartments, 1557 Knuth Ave. in Euclid. Meantime, the seven-story Breakwater Apartments, 14100 Lake Shore Blvd. in Cleveland was acquired by BTA LLC, which became a property of River Capital, a Wadsworth-based apartment investment and management group. An alternative for Altimate: Invacare Corp. of Elyria sold Altimate Medical Inc., its domestic maker of standing frames and mobility aids for use in patient rehabilitation, to Beachwood-based Rockwood Equity Partners for about $23 million. Robert K. Gudbranson, Invacare’s interim president and CEO, said Altimate “is a strong business, but it is outside of Invacare’s core North America/home medical equipment product portfolio.” Invacare said sale proceeds will be used to reduce debt.
This is the end: Cedar Point will shut permanently its stand-up roller coaster, the Mantis, but the amusement park didn’t say what sort of attraction — if any — will take its place. Mantis, which opened in 1996, was billed as the tallest stand-up roller coaster in the world when it opened. Over the last 18 years, Cedar Point said, the coaster has given more than 22 million rides. It will give its final rides on Sunday, Oct. 19
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REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Get outside — but don’t forget to bring your phone Researchers from Kent State University received a National Science Foundation grant to develop technology that will help visitors to Cuyahoga Valley National Park get more out of their visits. The $952,000 grant will be used to create a mobile app designed to highlight the park’s history and ecology and to turn guests into “citizen scientists” by sharing their findings with others. The app will work on Apple and Android products. The research team is led by Richard E. Ferdig, Ph.D., professor in the Research Center for Education Technology in the College of Education, Health and Human Services at Kent State. Park visitors will be able to use the app anonymously and free of charge, according to a Kent State news release. They also will be able to log in and save information about their personal park experiences. Kent State says the project’s main goals “are to explore the feasibility of using GPSbased mobile devices for informal science learning and to understand the impact of such technology.” In the release, Ferdig said, “We’re really interested in advancing informal science learning in the park while also getting people involved in citizen science – a process where they contribute to our scientific understanding of the environment.” More than 2.5 million people each year visit Cuyahoga Valley National Park, and visitors make about 110,000 requests of rangers and volunteers for on-the-spot information about its wildlife and resources, according
WHAT’S NEW
to Kent State. The project will provide funding to the National Park Service for two seasonal employees to help test and implement the app in Cuyahoga Valley National Park. — Scott Suttell
NE Ohio draws growing number of foreign students Cleveland ranks 42nd and Akron 50th in foreign student populations among the nation’s metropolitan areas, according to a report released last week by the Brookings Institution. The Cleveland-Elyria-Mentor metro area had an average of 5,477 foreign students during the 2008-2012 period, 65% of whom were studying for advanced degrees. More than 31% of the foreign students came from China, while 21.6% came from India, followed by Saudi Arabia, South Korea and Taiwan. The top areas of study were business, business services and engineering. The students spent $137 million on tuition and $58.2 million in living expenses over the four-year period. Baldwin Wallace University, Case Western Reserve University, the Cleveland Institute of Music, Cleveland State University and Oberlin College were the prime destinations. The Akron metro area attracted 4,753 foreign students, based on a tracking of F-1 visa holders, with 56.2% pursuing advanced degrees. Again, business, business services and engineering attracted the most students. China, with 37.4%, and Saudi Arabia, with 15.8%, sent the most students to the Akron area, followed by India, Taiwan and Iran. The students spent $70.7 million on tuition and $50.5 million on living expenses.
Strike up the brand
Akron-Mils, which is part of Myers Industries Inc., says its new product can be hung from any of its four sides, creating different “bin profiles” for users. The Universal Hanging Bin’s patent-pending design “allows bins to adapt to users’ changing storage needs,” Akro-Mils says. The bins feature a full-rim hanging cleat design “that allows the bin to be hung from a louvered panel by any of its four sides, and from rails by two sides,” according to the company. The bins are sized to fit evenly across standardsize wire and steel shelving units, which helps optimize storage spaces. Hanging the bins from the back creates a sloped picking bin, keeping parts visible and accessible, according to the company. Hanging the bins from the front creates a standard bin profile, and the bin can be filled to capacity. A rear hanglock allows bins to tilt out on steel or wire shelving units. Universal Hanging Bins are available in seven sizes and four colors: red, yellow, blue and clear. For information, visit www.akro-mils.com. Send information about new products to managing editor Scott Suttell at ssuttell@crain.com.
Case honors a 1950 grad who changed sports history The father of Nike Air is getting some props on the sports uniforms of his alma mater: Case Western Reserve University. Nike and Case have teamed up to honor Frank Rudy, a 1950 graduate of the Case Institute of Technology, with newly designed uniforms and footwear that will sport an emblem bearing Rudy’s initials — MFR — for Marion Franklin Rudy. In addition to his initials, the emblems will have a special texture that resembles Nike’s Air Sole units. Rudy is credited with inventing Nike’s Air Sole technology, which was first featured in the 1979 Nike Tailwind shoe. Also — as might be expected from a major research university like Case — Rudy’s favorite equation, L=MT2, or Life equals Mass times Time squared, will be featured on the inside back collar of the uniforms. Last year, Rudy’s daughter, Kim McMahon, was made aware of Case’s need for uniforms. She worked with Nike’s design team to develop the uniforms for the university’s 500 athletes on 19 varsity sports teams. The university said it is introducing the new uniforms this fall semester as part of a revamped branding initiative. — Timothy Magaw
BEST OF BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
COMPANY: Akro-Mils, Akron PRODUCT: Universal Hanging Bin
Hiram College, Kent State University and the University of Akron were the top destinations. The report was produced by Brookings, a Washington, D.C., think tank, to show the economic benefits of recruiting foreign students and the opportunity to retain them in the United States as skilled workers. — Jay Miller
The Cleveland Clinic’s brand increasingly is global, as evidenced by the findings of a new survey by LinkedIn. The professional network released a list of the 10 most influential brands in the United Arab Emirates, and Cleveland Clinic Abu Dhabi ranked fourth, behind two airlines — Etihad Airways and Emirates Airline — and Jumeirah Group, a luxury hotel chain. Cleveland Clinic Abu Dhabi, a multispecialty medical center located in Abu Dhabi, the capital of the United Arab Emirates, is under construction and is scheduled to open in early 2015. ArabianBusiness.com reported that LinkedIn said the United Arab Emirates rankings illustrate the “varied and vibrant nature of business” in the region, including two airlines, two telecom operators, two property and real estate companies, and other significantly consumer-facing brands such as a hospitality group, a bank, a health care specialist, and a consumer product company. In June, the website said, a LinkedIn report “named the UAE as the world’s most popular migration destination for professionals. From a list of 20 nations, the UAE emerged as the leader in attracting talent, gaining 1.3% as a percentage of its total workforce in a 12-month period.”
On the block? Reuters reported that Transtar Industries Inc. of Walton Hills, a distributor of replacement car parts, “is exploring a sale that it hopes could value the company at as much as $1 billion, including debt.” Citing people familiar with the matter, the news service said Transtar’s owner, private equity firm Friedman Fleischer & Lowe LLC, “has hired investment banks
Bank of America Corp and Harris Williams & Co. to run an auction for the company.” Transtar distributes driveline replacement parts, kits and components used in transmission repairs. It has about 2,300 employees and more than 130 locations throughout North America. Friedman Fleischer & Lowe acquired Transtar in 2010 for an undisclosed amount from private equity firm Linsalata Capital Partners Inc. Earlier this year, Reuters reported, it merged Transtar with ETX Holdings Inc., which it acquired from industrial conglomerate Jordan Industries Inc. and private equity firm The Edgewater Funds. Transtar “is the latest in a string of auto parts companies to hit the auction block,” according to Reuters. Graeme Hart, whose packaging conglomerate made him New Zealand’s richest man, is exploring a sale of his U.S. auto parts businesses, which he acquired for nearly $2 billion in 2011, Reuters reported in June.
In elite company Cleveland-based paintmaker SherwinWilliams Co. landed on a Forbes.com list of the world’s 100 most innovative companies. Granted, it snuck in at No. 99, but it’s a big world, and this is quite an accomplishment. The methodology is kind of complicated. Forbes.com says companies were ranked by their “innovation premium,” or “the difference between their market capitalization and a net present value of cash flows from existing businesses,” based on a proprietary formula from Credit Suisse. The difference between them, Forbes.com said, “is the bonus given by equity investors on the educated hunch that the company will continue to come up with profitable new growth.” To be included on the list, companies had to have seven years of public financial data and $10 billion in market cap.
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